Restaurants, Health Crisis and the Paradigm Shift

Because of the social isolation and mobility restrictions that have been decreed by the health crisis facing the region and the world, restaurants will be forced to readjust their business model to the changes that will come in consumer behavior.

Monday, March 30, 2020

The spread of covid-19 has forced restaurant chains to reinvent themselves in order to continue operating, as in most countries of the region governments have banned the free movement of people and forced most commercial establishments to close.

See "Post-Quarantine Consumption Patterns"

Faced with these abrupt changes, Juan Bernardez of White Rabbit Saatchi & Saatchi, told that "... The first thing to keep in mind is that this is not a casual change, it is an era change and it will modify consumer behavior for a long time, it will transform the bond, how we relate to each other, how we meet in public spaces, and these are issues very close to the operation of a restaurant."

Using a demand-income sensitivity model developed by the Trade Intelligence Unit of CentralAmericaData, it is possible to project the variations that household demand for different goods and services will undergo as the most critical phases of the spread of the covid-19 are overcome and the measures restricting mobility in the countries of the region are lifted. For example, if quarantine measures last for two months, demand for meals outside the home will fall by about 7% from the levels reported prior to the crisis.

For Javier Freer, a specialist in strategic business and professor at Lead University, in the current situation, restaurant operations must migrate "... to online and more flexible business models: Opening in a restricted manner, at hours that imply less costs, such as daytime. Working ideally with a single shift of productivity. Even consider whether to physically open only on high-selling days and on low-selling days only to offer take-out meals. To operate in more extensive schedules only in the kitchen, by taking advantage of the use of the resource for the online sale. Operate with fewer staff."

In search of improving conditions to stay alive, the Costa Rican Chamber of Restaurants (Cacore) reported that manages better conditions among its members and different key players in the sector, such as creditors, landlords, shipping platforms and the government.

Covid19: How are the outlook for food industry companies in Central America changing?

We prepared for our clients the report "Information System: Impact Analysis of Covid-19 on Business" that answers these and other questions in times of uncertainty.

Click here to request access to this report.

More on this topic

Restaurants: Surviving Restrictions Challenge

August 2020

In Costa Rica, the new commercial reality requires restaurants to operate with a capacity of 50%; however, since they maintain the same level of fixed costs, the losses of this sector could exceed 20%.

For more than four months, when the first cases of covid-19 were reported in the country, consumers have been subjected to severe restrictions on mobility and restaurants were forced to operate in conditions unfavorable to their finances.

Restaurants and Delivery Apps: A Difficult Relationship

July 2020

With the boom in demand for food delivery, Costa Rican restaurant owners claim that their companies have given up part of the profits to assume the costs of making alliances with delivery applications.

Since last March, when the first cases of covid-19 were reported in Costa Rica, consumers have been subjected to severe restrictions on mobility, which has led to transformations in the forms of marketing.

Restaurants: Home Deliveries as a Solution?

April 2020

Businessmen in El Salvador believe that in most cases home sales are only enough for companies to cover fixed costs and workers' salaries in this health crisis, but they do not visualize it as a long-term solution.

The outbreak of covid-19 in the country forced local authorities to decree home quarantines and to order restaurants to close temporarily, in order to contain the advance of the virus.

Restaurants: Chain Restricting attention

March 2020

Because of the threat of the coronavirus, the McDonald's fast food chain announced that as of March 16 in El Salvador it will only serve in self-service stores and deliver to homes.

Although no case of positive covid-19 has yet been reported in El Salvador, the chain decided to restrict its attention to the public, announcing that the measure will be taken indefinitely.

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